A few weeks ago, Aker Solutions suffered the disappointment of not securing the contract to build the floating production unit for Eni’s Goliat field in the Norwegian sector of the Barents Sea.
Instead, the work went to the Far East – predictable really, but nonetheless disappointing for Jarle Tautra, the group’s VP for energy, development and services, which is basically an amalgamation of new projects work and MMO (maintenance, modifications, operations) activities.
They were brought together a couple of years ago in a bid to take advantage of the considerable overlaps between the two business streams. It was also a way of striking a balance between the relative stability of MMO and volatility of projects.
Tautra told Energy that not securing Goliat was a “disappointment” and said of Eni’s decision: “Let’s hope they can deliver. This is the first major project in the north of the Barents Sea. It is in a very sensitive area and it is very important that it is a success.
“If anything was to go wrong, that would probably be a setback for the whole industry. In all fairness, Hyundai have built a number of FPSOs to North Sea standards, so they can definitely do it.”
However, Tautra has other fish to fry, some in the North Sea, and not least Ekofisk, where there is a great deal of work on the books.
Only last month, ConocoPhillips awarded the group an EPC contract covering the platform jacket and a bridge support jacket for the new Ekofisk accommodation platform – Ekofisk 2/4L. Moreover, the work will be carried out at the Verdal yard.
Tautra: “There are a lot of infrastructure projects, particularly on the Norwegian side, coming up over the next year or so. For example, there are upgrades of fairly old platforms such as Statfjord and Gullfaks.”
Norway is not the sole source of North Sea projects. There is the UK, too. Indeed, there is a pipeline of new developments and major overhauls in the offing which Aker Solutions and its competitors are watching closely.
“There are a couple of projects on the UK side that we’re looking at, and we’re in the process of deciding whether to bid them or not,” added Tautra, who is responsible for a business that currently turns over about £2billion a year and employs 8,000.
According to Rod Buchan, Aker Solutions Offshore Partner’s MD in Aberdeen, there is a “purple period” in prospect for the UK – projects such as Clair phase II, a replacement for the Schiehallion production ship, Jasmine, Golden Eagle, Mariner/Bressay and others such as the Breagh and Clipper South developments in the Southern Gas Basin.
“There’s a raft of medium-sized projects that could be of interest to us,” said Buchan.
“With that in mind, we’ve opened an office in London, where a lot of these projects are likely to be engineered.
“We’ve set up with a handful of people, though that is likely to expand to 20-40 people during the first phase.”
It is a decade or so since the group had a London presence – through Kvaerner, which was rolled into the group some years ago via its merger with Aker. It is from London that the company is doing front-end engineering for the next phase of the Kashagan project in the Kazakh sector of the Caspian.
“London is about getting closer to the projects … we’ll see how it works out,” said Buchan, who sees a purple period for brownfield, too.
“We’ve seen a lot of upgrades, but there are still facilities needing a lot of work, and as new production opportunities continue to be found around these installations, upgrades to extend life are necessary. We’ve seen that with the likes of South Auk and Britannia.”
But has the value of the work for this business unit grown, or what?
Buchan: “I think, over the first half of this new decade, the overall market size could increase because of the number of projects that could potentially come onstream.
“For us, as well, we’ve targeted working with independents. If (North Sea) assets change hands, as we hope they do, then the actual market that’s sweet for us will actually increase as we do more and more work with smaller new entrants, Fairfield being a good example.
“Also, with the likes of Taqa taking on assets from majors such as Shell, that makes the market more attractive for us, so we will continue to follow that model.”
Tautra said the Norwegian market was headed in much the same direction, only there is a time lag measured in years and Statoil remains all-powerful.
So how competitive is the Norwegian Continental Shelf marketplace, such as for brownfield and bearing in mind Norway’s reputation for looking after its own?
“It’s tough,” said Tautra.
“We have a number of players … some the same as the UK, and there are new companies coming in. They all see the North Sea as being an interesting place to be for the next five to 10 years.”
And the much vaunted claim that Aker Solutions is the only main contractor equipped to play the market on both sides of the UK-Norway boundary? Has a seamless North Sea been achieved?
Tautra: “I don’t think so. We haven’t seen many cross-border projects. I remember that, back in the 1990s, we did one big one … Gullfaks. Apart from that, there hasn’t been much cross-border activity.
“From the client side, we remain the only contractor with a sizeable presence on both sides of the North Sea. So when companies that are similarly organised, such as ConocoPhillips, ExxonMobil, both of which have cross-border organisations, when they look to the market, in other services they’ve been able to implement cross-border contracts, but in the MMO arena, there hasn’t been sufficient competition to enable them to go that way even if they had wanted to.”
So if the seamless North Sea doesn’t work, what of attempts to play the global market?
Tautra: “That’s a particular challenge, especially for this part of the business. Its about taking what we have learned in the North Sea over the past 30-40 years and doing more internationally. That’s now top of the agenda … how we can leverage that.”
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